Saturday, October 1, 2011
Saving the Moola: calculating the cost of time
Last week's Life & Style showed how to max out your time each day, and one of the tips I shared was creating a goals list (you can view this week's goals list here). I have so many things I'd like to achieve each day and not only do I have to prioritize in terms of what matters most to me, but with all the DIY, homemade and money-saving ideas available, it's crucial to figure out the wages for these chores. For instance, making my own croutons is great, but what is the cost savings? Or, in other words, what wage am I making by doing this?
This reminds me a lot of how Ms. Suze Orman views money. During the "Can I Afford It?" segment on her show, she often asks callers (once they have divulged the amount of whatever it is they want to buy and their take-home monthly pay): "So you want to work 3 months just to afford this?"
The same concept can be applied to chores. Do I want to spend, in total, 10 minutes making croutons? Here's how I can figure my wage:
Making My Own
Supply cost = $0.65
Time cost = 10 minutes
Supply cost = $2
In one hour, if all I did was make croutons, my hourly wage would be $6.90 ($2 - $0.65 = $1.15 x 6). That's pretty good for just making croutons (trust me - you'll find other chores have a much lower wage per hour!).
Amy Dacyczyn, author of the Tightwad Gazette, talks a lot about this in her book. She says there are many different factors one should consider in homemade projects: enjoyment factor, environment factor, time factor, and wage factor. Something that may only have a wage of $1 per hour isn't really worth it in terms of the cents you're saving, but if it's something you enjoy, that makes it worth it.
A good example of this is knitting scarves. I can knit a scarf usually in a few hours, if I'm using big knitting needles and it's a skinny scarf in terms of its width. The material for a scarf is usually pretty low - a big skein of yarn from Joann's can cost, with a coupon, about $7, and I can get two scarves out of that yarn. My cost is $3.50 in supplies, and my time cost is 3 hours. These days, you can find scarves at the dollar store. So not only am I spending more in supplies, but it's also taking me three hours. I'm technically losing money. Maybe this isn't the best example, then, but the point is is that I enjoy knitting scarves and they're more special to me, and I'm sure the wearer, when it's hand knit instead of dollar-store-bought. But, for someone who may not enjoy knitting and was just doing it to try to save money, I would say that isn't saving you money and you should let this homemade project die.
Here's a better example: Jason and I recycle plastic baggies. This, I have to tell you, is the most un-fun thing we do (that I can think of in this moment). I can wash and rinse one baggie about every three minutes. In one hour, I could wash and rinse 20 baggies. The little baggies from WalMart cost about $2 for a box of 40 baggies. Truly, my wage per hour is $1. That is atrocious, but even more atrocious than that is throwing away something that can be reused. We don't enjoy washing the baggies and the per-hour wage sucks, but the environment factor makes us want to wash and reuse baggies (but that doesn't I won't grumble when it's my turn to wash them!).
In any case, it's always good to know the value of what you're doing homemade in terms of real dollars and cents. If you have loads of other projects you'd like to do that earn a higher wage per hour, you can drop the lower wage projects for now and just purchase the goods. In those cases, you'll not only be saving the most money, but you'll also get the most enjoyment. I would strive for a balance between the two - try to keep all the highest wage earning jobs, even if you don't like them all, and keep around some of the small wage earning jobs that you truly enjoy.
For extra silliness, knowing the wage of the job you completed is good because then you can walk around and say, "I just made croutons and 'made' $1.15!"
Share with us: What is your highest wage earning job around your house? What jobs do you enjoy even if they don't save a lot (or any) money?